3 Tln Won Fund Set for New Growth Engine

17 Sectors Chosen for Future Growth; President Lee Explores all possibilities to cope with economic woes

President Lee Myung-bak is now determined to press his efforts to keep the sagging national economy afloat despite the prediction of a prolonged slowdown. He has shown firm determination for the recovery of the Korean economy despite the risk, calling on government officials to follow his lead without hesitation. Describing the current situation as a sort of crisis, he underlined the need for officials to give their all to help lift the nation over its hurdles, citing the case of independence fighter Ahn Joong-geun who assassinated a top Japanese official in protest of Japan's attempt to rule the Korean peninsula.
Despite Lee's endeavors, the situation is not so favorable given the spreading crisis to the real economy as seen in the rising unemployment rate, resulting in less consumption.
Experts are of the notion that it will take at least one or two years for the world economy to show signs of recovery and that it must undergo further hard times first. With the goal of facilitating Lee's bid to help resuscitate the national economy, the government has come up with a series of measures.
First, the government will establish a 3 trillion won ($2.2 billion) fund by 2013 in a bid to attract private investment to develop new growth engines, officials said. According to the plan outlined by the National Science and Technology Committee, the government and the private sector will start with an investment of 250 billion won this year. The amount will be increased to 3 trillion won by 2013, the Ministry of Knowledge Economy said.
The committee, chaired by President Lee, has also decided to provide tax incentives and support to private R&D activity on new technologies and high-tech goods. For the next five years, the government will invest 7.3 trillion won and attract 90.5 trillion won from the private sector to develop three selected technology areas, the ministry said. The ministry added that the development of the three core industries -- green technology, high-tech convergence and value-added industries -- would require money and resources to be invested into 10 projects.
In an effort to create a new market for the industries, the government will supply 1 million "green homes," which mainly use renewable energy, and spend money to form an industrial cluster for light-emitting-diode and radio-frequency identification development, the ministry said.
The funds will be spent developing technologies for renewable energy, reducing carbon emissions and eco-friendly, energy saving automobiles. The broadcast and telecommunications sectors will be integrated while investment in intelligent robots, new industrial materials and biotech-medical businesses will be increased. The government also plans to invest in developing software contents and in the value-added service industry.
Last year the government selected 22 projects in six areas -- energy and environment, transportation systems, new information technology, new integrated industries, bio-industry and knowledge-based services as the country's new growth engines. By the target year 2018, the new growth engines would account for 77 percent of national exports, creating 2.2 million new jobs and reducing dependency on imported oil by 13.4 percent, the ministry said in a recent report.

Projects' Success Depends on Action Plans
The growth engine project was preceded by the so-called "Green New Deal" plan. The just-announced massive development projects are the Korean version of a "Green New Deal," which is emerging as a catchphrase around the world, named after U.S. President Franklin D. Roosevelt's post-Great Depression economic recovery plan. The 50-trillion-won ($37.8-billion) projects have two goals: to realize low-carbon green growth and to create more jobs.
The Green New Deal plan is attractive as it can serve as a new growth engine for the Korean economy, which is rapidly losing steam amid the global financial and economic crises. Job creation is one of the most pressing tasks for the Lee Myung-bak administration to revitalize the slumping economy. However, it is ever more difficult to provide more job opportunities because an increasing number of businesses are now cutting their facility investment and slashing jobs due to the unprecedented crisis. There is no question that the nation cannot provide more jobs without such New Deal projects designed to cope with a worldwide crisis reminiscent of the Great Depression.
At the same time, the mammoth projects should be aimed at promoting eco-friendly growth in order to ensure sustainable development. South Korea, the world's 13th-largest economy, can no longer delay participating in international efforts to fight global warming by reducing carbon dioxide and other greenhouse gas emissions. Thus, low-carbon green growth is not a matter of choice. It becomes indispensable to sustaining the nation's industrial and economic development.
In this regard, the Lee government has taken the right path. It plans to invest 39 trillion won in nine major projects and spend 11 trillion won on 27 related projects over the next four years.
Policymakers predict that the projects will create nearly 1 million jobs by 2012. The Green New Deal policy came four days after President Lee announced his four-point policy directions for this year, which focus on economic revival. The government is now in crisis management mode to maintain the nation's growth momentum at a time when the economy is expected to slip into recession in the first half of the year. In this situation, the Lee administration is determined to take the initiative in speeding up economic recovery by carrying out the large-scale investment projects. One of the projects is to enhance the use of the nation's four major rivers by building dams, reservoirs and other water management facilities that will require 18 trillion won and create 280,000 jobs.
Also among them are plans to establish "green" transportation networks, including low carbon-emitting railways, bicycle tracks and other public transport systems costing 11 trillion won and creating 160,000 jobs. What's more eye-catching is the plan to produce green cars, including hybrid vehicles, and to develop clean energy sources -- solar and wind power and other renewable energy. The projects also include plans to expand forests and build two million "green" homes and offices. To ensure the success of the projects, policymakers must tackle several urgent issues. First, they have to make thorough preparations and map out detailed action plans. Second, they ought to secure enough cash to finance the investment projects, which will need about 12 trillion won every year.
Third, since excessive spending will lead to a huge budget deficit, they should not simply band together redundant projects under the name of the Green New Deal. This would only lead to a waste of taxpayers' money. It is hoped that the projects will succeed in achieving real green growth and development for the nation.
It remains to be seen whether the current government's ambitious projects will bear fruit in the near future. Success depends on whether the administration will push for consistent and well-deliberated action plans and whether the people will make concerted efforts in cooperation with the government policies.
In the process, the government needs to win the support of the people with proper policies and endeavors. nw

President Lee Myung-bak delivers the New Year policy address to the nation on Jan. 2.

President Lee Myung-bak presides over this year's first cabinet meeting held on Jan. 6